Book Review: The End of the World is Just the Beginning
By Peter Zeihan. Here.
I learned that The End of The World is Just the Beginning is the number five non-fiction best seller in America by walking through an airport. It’s quite a title. Does it live up to the hype? I’d say it was worth the read, but there are plenty of holes to poke.
Peter Zeihan is a self-proclaimed strategist who combines a study of demographics with knowledge of geopolitics to make economic predictions. His (bleak) view is that we’ve passed the special golden age of globalization that enabled cheap goods and services provided by the hegemony of the United States and favorable demographic tailwinds. It’s dark, but is it worth considering? I don’t know.
Why is it important?
The energy and natural resources markets are critical to economic growth. Many people will make a lot of money in this sector over the next ten years. That won’t be me, at least directly. Yet it’s still good to know about the dynamics. My focus is on the demographics and the implication on labor markets and productivity. And, for that, demographics are destiny.
Here are the positives:
It’s easy to read for an academic book. He has irreverent quips and uses words like ‘anywho.’
It covers a lot of ground, including detail on the top producers and uses for all the major commodities, which is handy.
He has quippy sentences that sum up big phenomena, e.g.,
Re: China - “Every country puts a premium on political unification. Every country has fought internal wars to achieve it.”
Re: what Bretton Woods enabled - “All at once, anyone and everyone could trade for anything and everything.”
His points on demographics and capital are the strongest: For the last thirty years, the Baby Boomers have been highly productive, and they’ve put savings into investments driving down the cost of capital. But as they retire and begin to transfer assets to low-risk investments, it will raise the cost of capital and slow everything down. Tax revenue will also decrease as there are less mature workers generating income.
Potential blind spots:
He references the importance of technology and that the list of winners and losers evolves with technological development, but it isn’t central to his argument.
A book of this nature usually has 50+ pages of citations and sources. This book has none. Harper Collins wouldn’t publish a book without fact-checking, right?
There are probably many exaggerations. It’s easier to write, get attention, and sell books when you keep things simple and make bold scary claims.
A couple of key lines that stood out:
“The industrial technologies that reduce mortality and raise standards of living cannot be un-invented, but if trade collapses, these technologies can be denied.”
Scary word - “decivilize” - but he claims that’s what is at stake with a breaking of globalization. “Everything we know about human civilization is based on the simple idea of organization.”
“Every since Columbus sailed the ocean blue, human economics have been defined by the concept of more.”
By 2030, there will be twice as many retirees, in relative terms.
“Whatever new economic system or systems the world develops will be something we're unlikely to recognize as being viable today.”
“Formally, China’s birth rate isn’t simply the lowest since 1978, birth rates in Shanghai and Beijing are now the lowest in the world.” (I request a fact-check on that one).
“China imports more than 70% of its 14 million barrels of oil it needs every day; Taiwan, Korea, and Japan important more than 95%.”